Magazine article American Banker

CFPB Takes First-Ever Enforcement Action against a Payday Lender

Magazine article American Banker

CFPB Takes First-Ever Enforcement Action against a Payday Lender

Article excerpt

Byline: Kevin Wack

Payday lender Cash America International will pay up to $19 million to settle allegations that it robo-signed court documents, overcharged members of the military, and took steps to impede an examination by the Consumer Financial Protection Bureau.

The consent order with Cash America is the CFPB's first enforcement action against a payday lender, and it hits one of the industry's biggest companies. Cash America is traded on the New York Stock Exchange (CSH), operates more than 900 locations in the United States and Mexico, and runs a large online lending operation.

Under an agreement announced Wednesday, Cash America will refund up to $14 million to consumers, including about $6 million that has already been paid back. The company will also pay a $5 million fine.

According to the CFPB, Cash America's debt collection subsidiary in Ohio, Cashland Financial Services, filed court documents in debt collection lawsuits without complying with the required signature rules. An estimated 14,000 consumers were affected.

The CFPB also alleges that Cash America violated the Military Lending Act, which caps interest rates on certain short-term loans to servicemembers at 36%. More than 300 servicemembers and their dependents were affected, according to the consumer agency.

Finally, the CFPB alleges that Cash America "carelessly destroyed records" during a routine examination by the consumer bureau that began in July 2012. …

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